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VIASL alleges govt. favoring Senok Automobile Assembley for vehicle imports
After temporarily suspending all vehicle imports, the Cabinet is now contemplating granting permission to a specific party to import electric vehicles (EVs) with 500 kW, plug-in hybrid electric vehicles (PEHV), and electric two-wheelers in a semi-knockdown (SKD) form for local assembly, with zero tariff, the Vehicle Importers Association of Sri Lanka (VIASL) claimed.
Addressing the media today, VIASL secretary Arosha Rodrigo said a Cabinet Paper (MIP/CP/25/2023) under the title Vehicle Assembly Plant Project at Kuliyapitiya by Western Automobile Assembly (Pvt) Ltd. was tabled, mentioning that Western Automobile Assembly (Pvt) Ltd. (Initially known as Senok Automobile Assembly (Pvt) Ltd.) has signed an agreement with the Board of Investments (BoI) on August 13, 2015, to assemble diesel vehicles of engine capacity from 1,000cc to 2,000cc using imported brand-new SKD units provided by technical collaborator, Volkswagen AG of Germany, with an envisaged investment of USD 26.5 million as a local investment.
According to the Cabinet Paper, the company had requested the BoI to implement an all-inclusive zero percent (0%) flat tariff on CIF value instead of the existing 30% tariff for the import of brand new SKD kits for the assembly of electric vehicles, PEHVs and electric two-wheelers.
Other than the Cabinet Paper, another proposal was placed by the particular company, requesting permission for vehicle manufacturers who could meet the USD 50 million investment threshold.
However, the company claimed to have fulfilled the requirement via an investment made back in 2021 and therefore to grant permission to import vehicles only to the company.
"A total investment of Rs. 8.05 billion has been made as of December 31, 2021. It further elaborated that this entire amount has been raised via Rs. 1.55 billion in equity capital and Rs. 6.5 billion via bank loans. The proposal is trying to portray the aftermentioned amount as the equivalent of the foreign investment of USD 50 million," the said company mentioned in the Cabinet Paper.
However, the VIASL secretary claimed that if this Cabinet proposal is approved, it will have a severe impact on the country's economy while affecting the country's foreign currency reserve as well as its national income.
It is evident that this proposal will result in the government losing further revenue in the form of Customs revenue and further leakage of vital foreign currency in return for absolutely nothing, given that the mentioned companies have already benefited from a tax holiday, the secretary said.
The only beneficiary from this proposal will be Senok Automobile Assembly (Pvt) Ltd., which will be given the opportunity to monopolize the market for their own private gain. The untimely loss will be for the people in the country, as valuable tax contributions that could have been used for their benefit will be lost.
Therefore, the VIASL requests that the President and the Cabinet reject the proposal to prevent a grave impact on the economy. (Chaturanga Pradeep Samarawickrama)
Pic by Pradeep Pathirana
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